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76. Claims to be upon oath.

Every claim against an insolvent corporation shall be presented to the receiver in writing and upon oath; and the claimant, if required, shall submit himself to such examination in relation to the claim as the receiver shall direct, and shall produce such books and papers relating to the claim as shall be required; and the receiver shall have power to examine, under cath or affirmation, all witnesses produced before him touching the claims, and shall pass upon and allow or disallow the claims, or any part thereof, and notify the claimants of his determination.

P. L. 1828, p. 62.

The appointment of a receiver for a corporation and an injunction against its contracting, collecting or assigning debts are held not to excuse it for the subsequent breach of a contract of agency for a period of five years, made two years prior to the appointment of the receiver. (Rosenbaum v. U. S. Credit System Co., 61 N. J. Law, 543, reversing U. S. Credit System Co. v. Rosenbaum, 60 N. J. Law, 294.)

B made a contract with a corporation to serve it for a term of years for a fixed salary. Before the expiration of the term the corporation became insolvent and a receiver was appointed, thereby occasioning a breach of contract on the part of the corporation. Held, that he was entitled to present a claim to the receiver, for the amount of damages he suffered by the breach. "The insolvency, suspension of business and receivership do not extinguish the corporation's life. The Chancellor 'may' declare the charter forfeited and void, etc., consequently the rule that when a master dies the contract with his servant is terminated is not potent in this hearing." (Spader v. Mural Decoration Company, 47 N. J. Eq., 18.)

Proof of claim for a tort may be made to the receiver. (Lehigh & Wilkesbarre Co. v. Stevens & Condit Transp. Co., 51 Atl. Rep., 446.)

77. Trial by jury allowed at the circuit.

Any creditor or claimant who shall lay his claim before such receiver may, at the same time, demand that a jury shall decide thereon, and in like manner the receiver may demand that the same shall be referred to a jury; and in either case such demand shall be entered on the minutes of the receiver, and thereupon an issue shall be made up between the parties, under the direction of one of the justices of the supreme court, and a jury impanelled, as in other cases, to try the same in the circuit court of

§ 76-77

§ 78 the county in which the corporation carried on its business or had its principal office; the verdict of the jury shall be subject to the control of the supreme court, as in suits originally instituted therein, and when rendered, if not set aside by the court, shall be certified by the clerk of the supreme court to the receiver; the creditor shall be considered, in all respects, as having proved his debt or claim for the amount so ascertained to be due, and in all cases in which no trial by jury shall be demanded the court of chancery shall have jurisdiction to pass upon the claims presented and to determine the rights of the claimants, and to make such order or decree touching the same as shall be equitable and just.

P. L. 1828, p. 62; Act of 1875, § 78.

78. Persons aggrieved by proceedings may appeal to Court of Chancery.

Every such insolvent corporation, or any person aggrieved by the proceedings or determination of such receiver in the discharge of his duty, may appeal to the court of chancery, which court shall, in a summary way, hear and determine the matter complained of, and make such order touching the same as shall be equitable and just.

P. L. 1828, p. 63; Act of 1875, § 82.

"The language of the seventieth section of this act [which Section 78 of the Revision of 1896 practically restates] is very comprehensive, and would seem to have been adopted for the purpose of embracing every question which could possibly be brought before the receivers for their action, and by which action any person could complain of being aggrieved." (Jackson v. People's Bank, 9 N. J. Eq., 205.)

This provision of the Corporation Act is not technical. Relief may be given under an original bill or by way of cross-bill, or in any proceeding by which jurisdiction may be secured. If after the receiver's determination a new element comes into the controversy, it is not necessary to present the same to the receiver before appealing to the court for adjudication. (Taylor v. Gray, 59 N. J. Eq., 621.)

In Leo v. Green (52 N. J. Eq., 1) the Chancellor held that a delay for eight years in appealing from a receiver's disallowance of a claim, where repeated notices had been given of an order limiting appeals, was a bar to any relief.

Where there is the same receiver for two corporations, one of which, as part of its assets, owns stock in the other, a creditor of the one may

appeal from an allowance of a claim against the other. (Blake v. Domes- § 79-81 tic Mfg. Co., 38 Atl. Rep., 241.)

79. Upon application receiver to be substituted as plaintiff in suits pending at time of appointment.

Such receiver shall, upon application by him, be substituted as party plaintiff or complainant in the place and stead of the corporation in any suit or proceeding at law or in equity which was pending at the time of his appointment.

P. L. 1828, p. 63; Act of 1875, § 81.

80. Actions not to abate by death of receiver.

No action against a receiver of a corporation shall abate by reason of his death, but, upon suggestion of the facts on the record, shall be continued against his successor, or against the corporation in case no new receiver be appointed.

81. Court may order receiver to sell incumbered property in litigation free of liens.

Where property of an insolvent corporation is at the time of the appointment of a receiver incumbered with mortgages or other liens, the legality of which is brought in question, and the property is of a character materially to deteriorate in value pending the litigation, the court of chancery may order the receiver to sell the same, clear of incumbrances, at public or private sale, for the best price that can be obtained, and pay the money into the court, there to remain subject to the same liens and equities of all parties in interest as was the property before sale, to be disposed of as the court shall direct.

P. L. 1866, p. 296; Act of 1875, § 84.

This is a supplement to a statute against frauds, is remedial in its nature, and should receive a liberal construction. The object of the Legislature was the prevention of loss by the depreciation in value of the property, pending protracted litigation. The mischief and the remedy proposed are plainly apparent upon the face of the act. It was not intended to confine the remedy to mischief arising from litigation of any particular character, but to all litigations between incumbrancers respecting the validity, extent or priority of their liens. The act must be so construed as to suppress the mischief and advance the remedy. (Randolph v. Larned, 27 N. J. Eq., 557, 560.)

§ 82-83

To vest jurisdiction in the Court of Chancery two jurisdictional facts must appear: First, that the prior incumbrances are disputed; secondly, that the property is of such a character that it will materially deteriorate in value pending the litigation. (Reilly v. Penn Cordage Co., 58 N. J. Eq., 459.)

82. Receiver of railroad, public work, etc., may sell or lease principal work, franchise, etc.

Whenever a receiver of a corporation shall have charge of a canal, railroad, turnpike or other work of a public nature, in which the value of the work is dependent upon the franchise, and in the continuance of which the public as well as the stockholders and creditors have an interest, the receiver may sell or lease the principal work for the construction whereof the said corporation was organized, together with all the chartered rights, privileges and franchises belonging to it and appertaining to such principal work; and the purchaser or purchasers, lessee or lessees of such principal work, chartered rights, privileges and franchises, shall thereafter hold, use and enjoy the same during the whole of the residue of the term limited in the charter of said corporation, or during the term in such lease specified, in as full and ample a manner as such corporations could or might have used and enjoyed the same; subject, however, to all the restrictions, limitations and conditions contained in such charter; provided, that nothing in this section contained shall be so construed as to apply to or in anywise affect any corporation authorized by law to exercise banking privileges.

P. L. 1842, p. 164; P. L. 1870, p. 55; Act of 1875, § 85.

83. Laborers and workmen to have first lien on assets. In case of the insolvency of any corporation the laborers and workmen, and all persons doing labor or service of whatever character, in the regular employ of such corporation, shall have a first and prior lien upon the assets thereof for the amount of wages due to them respectively for all labor, work and services done, performed or rendered within two months next preceding the date when proceedings in insolvency shall be actually instituted and begun against such insolvent corporation.

P. L. 1849, p. 309; Act of 1875, § 63; P. L. 1887, p. 99; P. L. 1892, P. 426.

Section 83 refers exclusively to natural persons, and not to corpora- § 83 tions. (In re Barr-Dinwiddie Printing & Bookbinding Co., 42 Atl. Rep., 575.)

The lien covers only assets in the receiver's hands. (Hinkle v. Camden Safe Dep. & Tr. Co., 47 N. J. Eq., 333.)

(Hinkle v.

Such lien is not prior to that of a mortgagee, whose mortgage was executed and recorded before the services were rendered Camden Safe Dep. & Tr. Co., 47 N. J. Eq., 333.)

The person who furnishes the labor or services of others under a contract to do the whole business of a corporation, or a particular branch of it, is not an employee, but a contractor, and has no lien by virtue of Section 83. (Lehigh Coal & Navigation Co. v. Central R. R. of N. J., 29 N. J. Eq., 252.)

A superintendent of the work of constructing a railroad voluntarily advanced his own money to pay the workmen for their work, supposing the company to be solvent. The company was afterwards adjudged insolvent. In the absence of an assignment of the claims of the workmen to him, or any agreement that he should have the benefit of their liens, it was held that he was not by subrogation entitled to the workmen's statutory liens for such payments. (North River Construction Company's Case, 38 N. J. Eq., 433.)

The president is not entitled to a lien for services as president; he is a member of the corporation and cannot be both employer and employee. The word laborer includes all persons doing labor or service of whatever character for or as workmen or employees in the regular employ of such corporation. (England's Executors v. Beatty Organ Co., 41 N. J. Eq., 470.) The corresponding section of the Act of 1875 was amended in 1887. Another act was passed in 1892 which was held by the courts to supersede the prior section, although not expressly repealing it. (Mersereau v. Mersereau Co., 51 N. J. Eq., 382.) The present section is substantially the same as the Act of 1892. Under the Act of 1892 it was held that a bookkeeper, although a director, in the regular employ of a corporation was entitled to the lien given by the statute. (Consolidated Coal Co. v. Keystone Chemical Co., 54 N. J. Eq., 309.)

In Fitzgerald v. Maxim Powder Mfg. Co. (33 Atl. Rep., 1064), the word "assets" was construed to include the entire assets or property of the corporation which came to the receiver for administration, whether incumbered by previous liens or not, with certain exceptions (which are set forth in the next section). It was held, therefore, that the lien of laborers was prior to the lien of a judgment entered before the insolvency of the company.

The right of preference is statutory, and does not vest until the happening of the statutory requirements. It is created only when insolvency proceedings are begun and then arises in favor of those persons and for such amounts and under such conditions as the legislation on the subject

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